Imagine pushing a full cart of groceries to the checkstand, telling the checker your phone number and PIN, and walking out  no card, ID, or phone required. That's PayPal's vision of the future.

eBay said this week that it is preparing a pop-up store in New York City to demonstrate how consumers could use its PayPal payment card - or not - to purchase coffee, groceries, and other products at physical stores. In the meantime, company representatives explained how the process will work at an event in San Francisco.

A dedicated PayPal shopping demonstration at the company's X.commerce Innovate show this week in San Francisco showed off a PayPal card, a dedicated token that would store all of a user's credit-card information behind the scenes. And if a customer happens to forget the card itself, a complementary PayPal "empty hand" solution will serve as a safety net, representatives said.

PayPal's solution is a rebuttal to Google Wallet and other solutions that encourage the consumer to pay via their phone. However, Google Wallet is a reality; PayPal's vision is not. The goal is to have both PayPal solutions in place by 2012, a spokeswoman for eBay and PayPal said.

PayPal representatives manned four booths, representing everything from a grocery store to a hardware store. The "demonstrations" were detailed presentations, but not performed with live devices or apps. The representatives also noted that the final versions of the products might end up looking different than what was shown.

Although the New York City popup store on Hudson Street is for merchants only, eBay has invited the press to try out the new point-of-sale services for themselves on Nov. 2.

PayPal already has an app for both iOS and Android. But what PayPal was showing was far more sophisticated. (See the related slideshow for more.)

PayPal's parent, eBay, has made a number of acquisitions in the last few years to transform itself from an online auction house to a facilitator of online commerce. Consumer applications like RedLaser help users find better prices for physical products, both online and in other physical locations. Mylo queries local shops to see if a particular product is in shops. And Where.com, one of the apps PayPal used, would seek out local deals in shops near the user's physical location. Geolocating deals is an increasingly popular form of luring shoppers, with Yelp, FourSquare, and LivingSocial, among others, trying out the technique.

The demonstration sent a "welcome back" deal to the user's phone, offering him a discount on his first coffee if he preordered right then and there. Once in the store, the PayPal representative said, the customer could bypass the line and pick up his beverage.

If the customer hadn't paid for his beverage, he or she would have the opportunity to pay for it with a "PayPal card". The user would then swipe the magnetic-stripe card (NFC wasn't used in the demo) and enters a 4-digit PIN.

At this point, PayPal has not marked the card with any identifying information. "There's no name and number when you use PayPal online, so there's not going to be any name and number on the card, either," the representative said.

The card doesn't store any information but the PayPal token. Online, the consumer can link whatever cards he or she wants to the PayPal card: American Express, Visa, loyalty cards, gift cards, et cetera. PayPal immediately pays the merchant, and the user's stored card repays PayPal. In an interesting twist, a user can pay with a different card after the fact; he or she has 14 days to go online and decide which card will be used to pay a particular transaction.

PayPal also has an "empty hand" solution. "I can literally walk into a store empty-handed," a second PayPal representative said. "I don't need a credit card, a wallet, cash, check, nothing, not even my phone."

With nothing but the user's phone number, and a PIN number, a user can make a PayPal purchase. Again, PayPal fronts the money and backs the transaction. A receipt is automatically sent to the PayPal app's wallet.

That also means that your phone number becomes an even more critical piece of information, something that a representative tried to convince a reporter wasn't that big of a deal. "The layer of security is the PIN number," the representative said.

The PayPal reprersentative also noted that grocery stores lock discount cards by a user's phone number. In addition, PayPal offers the same guarantee on the transaction, as it does with any other, she said.

For large purchases, the merchant and PayPal may offer the option of financing. The company also showed examples of how PayPal-specific transactions could receive discounts, as opposed to using a credit card or alternative form of payment.

Mark Hachman Mark joined ExtremeTech in 2001 as the news editor, after rival CMP/United Media decided at the time that online news did not make sense in the new millennium.
Mark stumbled into his career after discovering that writing the great American novel did not pay a monthly salary, and that his other possible career choice, physics, required a degree of mathematical prowess that he sorely lacked.
Mark talked his way into a freelance assignment at CMP’s Electronic Buyers’ News, in 1995, where he wrote the...
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